Weekly Roundup: Pound supported by BoE rate expectations 

The pound got off to a fairly positive start last week, the increasingly risk-sensitive currency was supported by an improving market mood, which allowed it to shrug off some weak PMIs. 

This uptick was supported on Tuesday by a stronger-than-expected uptick in UK business confidence in the second quarter. 

Sterling continued to firm in mid-week trade as it was supported by Bank of England interest rate speculation.  

Contrary to the Federal Reserve and European Central Bank – which dropped hints they may be close to ending their hiking cycle – the BoE is expected to continue raising rates in the coming months. 

However, the pound then faced some resistance again in the second half of the week as it was undermined by some underwhelming retail figures and a souring market mood. 

Unsurprisingly the BoE’s rate decision will be the primary focus for GBP investors this week. A 25bps hike is largely priced in, leaving the focus on the bank’s forward guidance. Signals that the BoE expects to continue tightening monetary policy could help to underpin the pound.